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History of Telecom Deregulation

Series/Special. Exploring the work of Clay 'Tom' Whitehead, who fought to deregulate the telecommunications industry. New.

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Tom Whitehead 17, Whitehead 11, Luxembourg 11, Us 9, Margaret 7, At&t 6, U.s. 6, Europe 6, Washington 6, Kansas 4, United States 3, Salomon 2, Mit 2, Pentagon 2, Otp 2, France 2, Brussels 2, California 2, Don Baker 2, Morse 2,
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  CSPAN    History of Telecom Deregulation    Series/Special. Exploring the work of Clay 'Tom' Whitehead,  
   who fought to deregulate the telecommunications industry....  

    February 9, 2013
    10:00 - 11:45am EST  

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. he will be here from the light of a recent video showing an animated version of the city of manhattan. this is coming up. i want to thank you for watching today. we will see you tomorrow morning at 7:00 a.m. eastern. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> will look at the work of clay whitehead who fought to deregulate the telecommunications industry.
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later, scott walker. a look clay whitehead year he led government efforts in the 1960's to break up communication monopolies. some of his former colleagues spoke at the library of congress. this is about one hour and 40 minutes. >> members and friends, i have the pleasure of serving this institution as the associate librarian of congress. we are here to celebrate the official assessment of the clay t. whitehead papers. this evening marks the beginning
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on many levels. from this point forward the library of congress has pledged to provide access to the story. the personal history of his participation in critical events of the 20th century. we also pledged the necessary corollary to protect and preserve these materials in perpetuity. he yells from kansas where his interest in ham radio foretold his life work. graduate and undergraduate studies in the engine if not the engineer a huge lead to sweeping and lasting a changes in the entire communications
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landscape in the united states and the world. while he means his reputation on this in ensuring a smooth transition, we know from our experiences that researchers, scholars, curious citizens will find ways to learn from this collection that we cannot imagine today. the continuing interest in technology was the subject of one that was reviewed today in the "wall street journal." this gives us much pride. under the leadership under billington and the chief of the
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manuscript division and his extraordinary staff. this has been a further website and much of the collection. there are gems here to be discovered by future generations. she has discovered the most important ways to use this description of specific items to assist those who will mind these riches in the years to come. the web site provides links to other protections. it became part of their history. everything will be connected.
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we are celebrating this evening collaborations' of all kinds that can only benefit the quest of knowledge. the library of congress is all about this quest. manuscripts, and musical scores, and frankly any medium from the past or present are yet to be invented in the future that will contain knowledge. these things are connected by the thousands of people or our doors literally or virtually every day. these form the foundation of the library of congress as a library but also its role as classrooms, lecture halls, a performance space, and vinny's for enlightenment and discovery of new things. it is with this in mind that it
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is a pleasure to turn the podium over to dr. market whitehead he will say a few remarks and introduce our program for this evening. thank you. [applause] u.s. so kind and brilliant. i hope after these remarks that none of the will worry about this. i will say it is all there. government officials,
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colleagues, new friends, i am simply thrilled and honored to see each of you here tonight. thank you for coming to this library from across the street. it is a joy to thing you are here. this has become a heartwarming experience to learn how connected you are to each other. and now connected we all are to each other through this. the fight for internet freedom, and the great american pastimes. poker. thank you for leading the library.
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for your great judgment and bringing not heard here. during the month of procurements she has been an important support. i have learned she is a continent librarian. perez me is luminescent with cum laude in divisions across the world that will help her lead this into the digital age. it is a privilege to have her here. i thank you both. he originated the idea.
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i also extend my warmest thanks to the president and ceo of the hudson institute. this evening is very generous. i think with my whole heart a distinguished fellow at the institute for supporting and applying his famously great mind to so many hours to tom whitehead as a topic. let me turn to you and say that if he were here he would thank you extravagantly. he helped to make them significant enough to be here.
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i hope you will forgive me. there are so many samples of this. he is generally credited with the structure of the deregulation of at&t. when henry glover discredited him. let's get to tom. drop the entire time i was married to tom and day and never went by without his saying two phrases. if you could just" fill in the blank "i bet you could" -- fill in the blank. this set up an action. what you call this the framework seems toe's thinking,
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have been treated to forethought and analysis. this was the case from breakfast to bedtime. let to some remarkable results. there are practical jokes that begin to these. the evidence is all around this room. even today they consider it a major accomplishment with scalia. this is in the papers. these are mostly the two sets of white house papers and director of the offer of communications
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policies. there's a national exchange. i fear that the galaxy or communications that are part of the story are nonexistent. the business plan he devised is under review. how did tom "if you could just" mentality to this treasure library. ? he took the papers with him when he left the white house. during the jurassic era and he brought claytwhitehead.com.
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he invited and recorded his esteemed future colleagues and friends. they work don baker, henry geller, bill hatfield, brian lamb, glenn robinson, dick wiley. he brought his papers from the basement and put them right in the midst of our lives. bringing susan into our lives to do this. he read some of the book. lastly, he dreamed of a tough kampala's a journal on the weather. as an afterthought he said -- 8 telecom journal on the it, he was doing two things.
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these were his deep opposition to the regulation of the internet and is upset over the lack of internet freedom. with all of this turmoil in called a friendrne to interview him. he spoke at length about the ark of telecom history to which i believe he has contributed. i have seen this long before his loss. it made me want very much to donate papers. i knew that he did not like attention. i am sure that is no surprise to any of the appeared he would stand in the back row of every photograph. " see and introducing himself as a small businessman. he wase the first to say
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a very small businessmen. he set the stage for the donation up his papers. the bills were coming in and the unfinished s.a. and the concerns of the abolition of policies field my conviction. it seems a short lead to have the papers reside here. they will compensate with the lack of the papers with my multi-year project.
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the bat was made. -- the bet was mde ade that i would come to this magnificent building with our family and our colleagues to celebrate with the panel. i bet that i could ask the most accomplished moderator in washington and anywhere to lead it. he has been a force for almost all of his career. six months after graduating from harvard college he found himself working for moynihan in the nixon white house for urban affairs and environmental issues. he returned to washington where he was ronald reagan's
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deregulation czar. because of his leadership, the most prominent public policy institute in the world, we recognize him as a giant in the industry. i am delighted to introduce them as a moderator of our panel. [applause]
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>> thank you for your grace, a care, intensity of purpose that has brought us all together. we extend thanks and congratulations to jim billington and their colleagues at the library of congress for undertaking to preserve the papers. there's a competition of ideas. among interest the article that nacelles politically entrenched, farmers, retirees. among ideas, the advantage lies with those that mobilize tangible constituencies, green energy, home ownership, too big to fail finance, a new interest and ash that idea is.
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the operate at a disadvantage. this is an idea that is good that hypothetical. in not only lacks the live constituency but is actively opposed by the interests. there are cases where such ideas to somehow prevail. if showers society with unanticipated benefits. it is for this reason that we should document, a steady, celebrate, and emulate, whitehead and the amazing history of this telecommunication policy in 1970-1974 and his subsequent career as a path breaking of your printer work -- pact breaking an entrepreneur. margaret has established an launch this today. it does take some explaining.
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tom was a reserved and cerebrum man. he was preoccupied with the construction of things rather than their appearance. he could be confident and incisive and analyzing problems and strategies. he would sit saying nothing at unsettlingg at hiin silence. he was vacationing mysterious and in direct in his met it so that no one knew exactly where he was going -- met did so no one knows that where he was going until he was there. anyone would have judged them as
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a brainy academic who would be a complete disaster. his practical accomplishments were not only great but also transforming. so much so they risk being obscured by the nobel prize fallacy. when it is announced each october, newspaper readers explain he got the nobel prize for that? it is completely obvious. what they fail to see is how strange and errant the idea had appeared to be when it was first propounded eight early -- propounded decades early. it had been dismissed until its triumphs so completely it became the new conventional wisdom and then penetrated the wider culture. our aim is to provide
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prospective and perhaps a bit of personal color to the days of yore when a young nixon aide advanced a set of policy ideas that were denounced and dismissed and forcefully opposed by the entire telecommunications establishment. that would be the telephone monopoly, three television networks who together control the airwaves in evening news. i should mention the pentagon, the federal communication commission, and powerful quarters with in the nixon white house itself. in a few crowded years, tom and his band dispatched them all.
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there is a manifesto and government instruments record those no longer an extension cord for broadcast television but a robust alternative with hundreds of channels suited to every taste and interest. with the essential first steps toward today's system of universal 24/7 wireless voice and communications practically available to every office on the planet. he was working in a white house where intellectual band with was appreciated, dominated by henry kissinger, daniel patrick moynihan, arthur burns. his reputation had risen so high by the spring of 1974 that he
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was asked to chair a secret effort to plan an hour by hour government should president nixon resign his office, and after that they did not even know about. he he suddenly walked away from it all. he's all more clearly than others that his policies had opened a new avenues for radical innovation. the system pioneered the now standard model of cable television providers owning and managing their own space-based distribution channels.
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finny chairethen newly chaired e luxembourg. it is one of the world's two largest commercial satellite companies. he used the scheme of national allocation of the electromagnetic frequency spectrum to obliterate the european state television monopolies. the business career recapitulated his government career. it confused the status quo establishment and then transformed its. he died at the age of 69, much too young. it was 2008. the new world a pluralistic
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dynamic communications was a reality. he was busying himself after the margins of disruption such as promoting internet freedom. this was devoted to photography and dark rooms, rocketry and chemistry. as an undergraduate in the late 1960's, he spent 10 months working on experimental electronics designs at bell labs in murray hill. his bachelor's and match shook -- master's degrees were in technical engineering. these led to several years at the rand corp. and u.s. army.
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the next year something surprising happens. he was asked to direct a budget policy issues for the hubert humphrey presidential campaign. this approach reminded tommy had always regarded himself as a republican. he declined the offer and offered his services to the richard nixon campaign. during the transition in late 1968, he worked on defense and budget planning in an obscure attic with an elite team that included alan greenspan. during his first year in the nixon white house he became increasingly concerned that the federal communications policies toward suppressing technological innovation and conceived the idea of the special white house office to break the jam of agencies and commercial
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protectionism. he floundered on the task of finding the right person to head the effort. reluctantly, he agreed to take on the assignment himself. one indication of the force of his intellect and character is the extraordinary quality of the individuals he attracted to the new office of telecommunications policy. a new law professor with an interest in regulatory policy. antonin scalia signed off as counsel. they are with us this evening. three other veterans will begin our panel presentations. henry goldberg is succeeded as the general counsel is one of
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the deans of american communications. dale hatfield went on to a distinguished career in academics and government. was acting director of the successor office and the commerce department. during his consulting days he worked with tom in a variety of business centers. this was the key architect of the bell system breakup and telecommunications deregulation following a highly successful career as a consulting economist. he returned to his all modern where he is not a centennial
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prof. of public policy and a senior fellow at the stanford institute for economic policy research. following these three presentations we will hear from global entrepreneur t om's partner. the concluding presentation will be from a professor at george mason in and one of america's post prolific scholars of telecommunications policy. he was tom's colleague during the latter years when tom was a visiting professor at george mason and an active participant in the information economy project. further information about our speakers is in the programs.
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[applause]>> thank you. thank you very much. it is an honor to be on this panel with my old colleagues and friends. it is a little odd to be on a panel in which the point of view is tom's. [laughter]i am the leadoff speaker. my purpose is to discuss the significance of that tom whitehead's career. why should anyone care about his papers? let alone want to read them? he had many accomplishments. i will focus on the ones that not only had a profound" at the time but also made a
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contribution from which we benefit today. it turns out that all of these are accomplishments involve video services although they had an impact on other telecom services as well. when tom entered government and 1968, the telecom world had one telephone company with earthbound wires that provided among other things carriage videos signals over long distances. the distances impose great cost s since video requires a lot of bandwidth. it is expensive to have a national tv broadcast network. three companies did. there were many local tv broadcast stations and community antenna cable tv companies that retransmit those signals.
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the 12-channel cable system was state-of-the-art. contrast that world with a world we have today. a world of program channels offered from a variety of sources through a variety of technologies, representing many viewpoints. the world in which new technology is welcomed and new competitors are at least the goal of policymakers. i am not saying that tom whitehead is responsible for this. maybe i am. you decide. pomposity -- tom's letter to the telecom world was communication technology. most of his lasting contributions had to do with satellite technology.
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satellite technology was the ideal disruptive technology for its time. it solved most of the problems that tied us to the constricted telecom world of 1968. it is like a tall radio tower. any place on the globe that can see the satellite can transmit. it has a lack of in with. it can carry a lot of tv signals at a low cost. he proceeded for the tasks he had in mind. it was opening up the telecom industry to new tv program voices, new opportunities for competition, and new services for consumers. to do this, he started with a simple idea that we called a policy that held any technically
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or financially qualified company could launch or operate a communication salad i -- satellite. in one stroke, adoption of this policy led to the entry of new satellite carriers. because of competition, nationwide connections were affordable for start up companies creating new cable program networks. like hbo and espn and mtv and ted turner's networks and even it expired -- inspired a new network concept called c-span. cable offered more than retransmit tv broadcast signals. cable companies expanded their channel capacity to carry the new programming. today, broadcast networks drag that there are original programming is as good as cable's. that is a far cry from single
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transmissions -- retransmission days. the success of open skies had a broader significance beyond the tv world. it helped prove the notion that if competitive telecom marketplace could deliver much more to consumers in a regulated one. once outside of government, white house put a further spent on satellite technology with his cable shopping center. instead of offering satellite time on a circuit by circuit first come, first serve basis, he dedicated an entire satellite to the most attractive program networks so that cable operators could use one dish to pick up the best networks. that is not only cheaper and easier for cable operators, it added a enormous to the satellite capacity. all of the programmers wanted to be on the hot bird.
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they paid a premium for that honor. the satellite was no longer just a delivery pipe. it was a programming resource with a value greater than the sum of its parts. tom carried this opposition and the disruptive potential of the satellite is one step for there with the project for europe, which overturned the established order of state-run broadcast services and rely on private enterprise and commercial program services to give the public in europe a new kind of television. let us go back to tom's sample idea of open skies. the idea was critical. the idea alone did not lead to the revolution we have witnessed over the past four decades. before there was the idea, there was tom's commitment to change. then, there was archimedes
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place to stand on to leverage that idea. for tom, the place to stand on was his position of influence for open skies. it was nothing to say in the white house. initially, it was the chosen instrument for luxenberg in the video world. to this perfect storm, of commitment to change, a simple but powerful idea in a position of influence would have to add another factor. tom's dedication in pursuing change. his willingness to take risks for change. his coverage -- his coverage. that quality has been in short
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supply among policymakers. tom had a ton of it. it made all of the different in achieving his success. the fact that this perfect storm occurred in a post an update -- in this geeky guy from kansas is truly extraordinary. [laughter]on that note, let me go back to the question i opened with. what is his significance? is tom white house -- whitehead responsible for the telecom war we have today? let us answer with a thought experiment. if satellite technology did not exist, no low-cost high- capacity worldwide networking, would we have had cable networks, public affairs networks, international networks? i think not. next experiment -- satellite
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technology but no tom whitehead. no open skies. we would have had a monopoly satellite provider in the u.s., just like we had internationally. that was the policy alternative that we were facing that open skies defeated. we have had the same abundance of choice and innovation with a monopoly model? i think not. what we have a cable industry competing with telephone companies today? i think not. the telecom world we have today was not inevitable. change was not inevitable. people make a difference. , whitehead made a difference. -- tom whitehead made a difference. thank you. [applause] >> thanks.
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i first met tom in 1970. tom became the first director. my connection was through a physicist who i had worked with at the radio laboratories of the department of commerce. walter had worked in the white house under a comverse technology and science fellowship program. that is where he met tom. i do not remember my first meeting with timom. i was a junior analyst and a small group within the commerce labs. it supplied support to otp.
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i do not recall the details of our earliest meetings. we seemed to hit it off well. we were both almost the exact same age. we were born in 1938. we were from the midwest. early in our careers. we will both licensed amateur radio operators or hand's. not surprising, i was totally in awe of tom. not only because he was so smart, knowledgeable and curious about some many different things, but also because while we were at the same age, he had already worked in the white house and was dealing with critical issues of public policy. , and i hit it off well for another reason beyond the three reasons i mentioned. tom had degrees in electrical
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engineering and a doctorate from mit. the latter included management decision-making, system analysis, and operation research. i have an undergraduate degree in electrical engineering and a year of additional graduate study. operations research is a term that is applied to the use of quantitative or mathematical models in decision-making. we shared a background and interest in management science, especially one i applied positions of this policy. that is not the point i want to make here this evening. the point i want to make is that in establishing it, he created an environment built around using serious and
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objective and economic analysis to inform that communication policies was critical in american history where it was being decided whether we would continue to have monopoly control and communications or embrace our more traditional reliance on open entries and a competitive free enterprise system. that had a raft of issues. in the case of open skies, there were questions of whether there were enough parking spaces in the orbit to accommodate competitive entry. also, opponents argued there was
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not enough parking spots. they argued that there was compelling economies of scale or a monopoly care touristic associated that would make the competitive entry on wise from the public policy perspective. questions were posed in the terrestrial communications markets and the emerging mobile radio field. i see so many people that were involved and played key roles in the studies of analysis of this issue. tom's contribution was not just the policy recommendations themselves. but also in establishing an environment conducive to objective technical and economic research.
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and protecting the people in the trenches from political and appearance. part of his legacy lives on in the form of the annual telecommunications policy research conference. pprc brings together a diverse interdisciplinary international group of researchers from academia, industry, government, and nonprofit organizations to challenge each other's ideas and research resourcults. the first in a series of annual conferences was organized in 1972. it usually held its anniversary last december.
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it is one of the premier if not the premier conferences on telecommunications internationally and domestically. it was instrument in the creation of the conference. tom was entry mental and getting the early funding for the conference -- influential and getting the early funding for the conference. tom and i shared an interest in 6 amateur radio. we both received our amateur radio licenses and call signs from the federal communication commissioners -- commission and our early teens. i communicated with margaret to tom's citizen -- sister learn about his experience in
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ham radio. the essence of amateur radio is the use of radio communications and applications as a hobby where it can play an important roles in times of disaster and so forth. there are two important aspects of amateur radio that are relevant. one is being able to communicate with other amateurs close by and around the world. also providing an opportunity to build and experiment with the radio equipment and systems. tom's grandfather had been a stationmaster on a railroad line in oklahoma. i find this fascinating. he used his grandfather's old telegraph to communicate with using morse code. by the time he went off to college, he had postcards from other amateurs confirming his contact with him.
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he he built equipment and experimented with antennas. it gave him early experience with the radio before his formal training at mit. i understand that the charge given to the panelists is to provide further contacts, a highly consequential moment in economic development. i cannot speak with certainty regarding the consequences of tom potts point here -- tom's boyhood experience. his ability to allow him to communicate with people far beyond his early home in kansas and his provision of an outlet to experiment with wireless communications played an important role in keeping his interest in technical elements
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of wireless elements of all types. my time is about up. i would like to touch on my work with tom after we both left government. i worked as a consultant to tom when he was -- during the galaxy satellite program. my consulting firm and i were involved with a company tom founded called national exchange. it was intended to provide communication services and the u.s. using advanced satellite technology with a novel method of routing communications traffic among small transmitter reserve stations. i worked with tom on a number of his projects when he had his own small concertina -- consulting firm. i am honored to have then associated with tom. i feel especially privileged to
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have participated closely in his later ventures. through those ventures, he changed communications here in the us and all over the world. thank you. [applause] >> thank you. it is a pleasure to be here and see so many old friends. it is good to be back in washington. i miss california already.
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we are here to celebrate tom whitehead's ideas and accomplishments. i will focus on one of them, the beginning of the breakup of the bell telephone system. my first -- i cannot help remember that i came to washington in the summer of 1970 as a brookings institution fellowship. the folks gave me a chance to choose which internship i would take for a year in washington. one choice was the general services administration, which i had never heard of. [laughter]the other was to work for someone named clay whitehead in executive office. tough choice. i went to meet tom who was ensconced in the old executive
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office building. he turned out to be impressive in part because of his air of genetic law -- detached inscrutability. i gave him my gsa dream job and became the last new employee of the old office of telecommunications management and one of the first new employees of the new office of telecommunications policy. that one word change in executive order 11556 exfo sing otp was from management to policy. it foretold an lp will in the world of telecommunications you have heard about. it was largely a triple to tom whitehead. -- attributable to tom whitehead. i thought he hired me because he
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wanted someone in the office who was further out on the geek scale and he was. i shared a vast office in building to which tom eventually was forced to move. my desk came equipped with a bell system lobbyist. [laughter]his name was marvin holton. his job was to take me and others to launch once or twice a week and to provide anecdotes of telephone lure. i was not singled out for this honor. marvin came with the desk. everyone at otm had an assigned bell lobbyist. marvin was not an ideal fit for me. he did not know anything about economics and cared request --
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last. he gate and disbelief when i told him the virtual of competitive enterprise. he never got comfortable with my paying for my own lunch. [laughter]that meant he had to pay for his. marvin was a telephone engineer and devoted to the appreciation of electromechanical telephone switches. he quietly confided to me that his favorites which was the number five crossbar. [laughter]he would come up to the ranks at some bell. i often wondered how he went about crafting his reports of our lunch conversations. all i gained from the exchanges was wait. after a wild, i stopped
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accepting the invitations. i never lost to wait. tom whitehead had no difficulty with the idea that more competition and less regulation would be a good thing for telephone customers as well as others. as in the executive order, he aimed at more policy and less government management. at that point, he had embraced orchid competition with respect to domestic communication satellites. you have already heard a good deal about this. as director of ot p, he used the bully pulpit of his office to promote market solutions and deregulation in other areas of telecommunications and broadcasting. the federal communications commission did not react warmly to these ideas. nevertheless, most of his proposals were implemented during subsequent administrations of both parties
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and the affect was a revolutionary. one notable ot p idea was the breakup of the old bell telephone system. undertaken in order to better align the incentives of the local bell operating companies with emerging competitions and telephone equipment manufacturing and long-distance service. the bell operating companies had no economic reason of their own to oppose long-distance competition or equipment competition. their opposition, which extended in some cases even to sabotage competing complied as of the services, was created by the simple fact they were owned by a company that also owns those two monopoly enterprises.
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it was not rocket science to see that the incentives were missed ruptured. the policy solutions were clear. change the structure that gave rise to the antisocial incentives of the bell operating companies. i wrote one of my numerous policy memos to tom. he had the audacity to label them inflammatory. [laughter]i think he has outdone me. [laughter]the memorandum suggested that ot p sent a letter to the antitrust division urging the revival of the 1956 and not playstation case against, which had been settled.
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tom suggested that i go over to doj with -- for a chat with his friend don baker. ids covered that the antitrust division was are ready pondering a revival of the 1950 six case. it had not also attacking the long-distance monopoly. from that point forward, otp supported doj investigations behind the scenes. filed its famous case in 1974 over general saxby's signature. it did take a decade and several major miracles for the case to conclude successfully. in the end, be bell system caved and excepted as a settlement the exactly crest --
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request the government had entered in 1974. today, the telephone equipment market is highly competitive. long-distance service invoice process gas prices are close to zero dollars. local telephone companies face competition. more broadly, one of tom whitehead's most important insights was to see the benefits of competitive markets, not simply in terms of lower prices or more diverse quality options, but for their effects on technological innovation. for example, in pursuing his open skies policy, tom foresaw the potential of the competitive satellite industry to stimulate innovation in the distribution of video signals to and by cable systems. the result was an explosion of video programming supply.
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this permitted cable penetration of urban areas. cable had been confined to rural areas. this supply shift is more than the resentments of richard nixon disintegration schemes to undermine the oligopolistic tendencies of the broadcast networks. the breakup of the old bell system produced a similar effect on innovation in telecommunications. it is doubtful that the enormous social and economic benefits associated with digital technology are applied to telecommunications such as the internet and broadband mobile services would have occurred so swiftly or at all, but for the disintegration of
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the bell system monopoly. although not fully apparent at the time, the bell system in partnership with its regulators and notwithstanding the nobel prize at bell labs, had not promoted the adoption of new communication technologies. successfully communicating a new communications freedom, the freedom to innovate, tom whitehead made an enormous contribution to social well- being in the united states and on a global scale. thank you. [applause] >> tom whitehead audio book chapter four or five.
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i want to thank margaret, clay, and abigail for inviting me to be here today. i was part of a small but important part of tom's a life. tom was a very large and important part of my life. in november 1980 two, i met a man who would change my life in ways i cannot imagine. he also changed the lives of literally millions, probably billions of people around the world, enabling them to receive tv, radio, and data in ways i never imagined. at the time, i was a 28-year-old vice president that was salomon brothers. these were the years of liars poker. you could do anything you wanted as long as you knew it was your job that was on the
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line if it did did not make everyone a bunch of money. i was told to be present for a meeting with a really important guy who had been a client of the firm. salomon brothers participated in the financing of the galaxy system. several people were in the conference room listening to a mild-mannered, soft-spoken, low- key guy from kansas. talking about how easy it would be to buy a satellite, launch a rocket, disrupt the multibillion-dollar european tv industry, and he had no backers or partners, but it only cost 250 million dollars. it was in a place called the grand duchy of luncheon for -- luxembourg. it was a real place and not just the setting of the look -- book.
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everyone left the meeting saying the equivalent of that era's expression, "good luck with th at." i leapt at the opportunity. others saw visions of my desk eating vacant for the -- being vacant for the next young whippersnapper. they were right. i did leave to become tom's partner and to move. i spent the next two years in luxembourg. at the time, i live in luxenberg, there was one highway. it took you there. if you were driving to brussels -- from brussels, you could only exit and luxembourg if you were
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on the southbound lanes. [laughter]going north, you had to make a u-turn in france and come back. similarly, if you left the airport, you had to be especially careful because the exit was in france and if you happened to be an american, and you needed a passport to reenter. i not care. i was young, single, spoke fluent french, passable german. what mattered to me was -- they did not matter to me that there were four restaurants in the capital city. i was going to live for a year and a room at the holiday inn. i had every single item on the menu at the holiday in luxembourg and thirport.
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the highlight of my time at the holiday in was when different foods came into season. the holiday and celebrated the festival -- [speaking rfrench] in addition, there was traveled. luxembourg was the only country in europe not a member of a yada. unless there were members that cannot be served. my travel took me two more mundane places. i started most days by driving in the fault -- fog to an airport and flew onward from there. each of these was a two or 3
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hour drive without the autobahn. my days were only 18 hours long. i would return at midnight and have a three hour phone call with tom whitehead, who was living in sunny brentwood, california. then there was the drama and the excitement of working in a set your that was of marginal interest to neighboring ia.ernments, medai we were sued by government within 20 minutes of filing our incorporation documents. that was day one. we worked very hard for two years. we found the first investors and channel users. we built a staff. whored the first employee, later became a ceo.
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we rented offices and put up with almost comical harassment from nearly every quarter everyday. every night, i called tom. our story was the stuff of a hollywood movie. i was at warner bros. for almost 10 years. in the end, we pioneered an extraordinary change. here are some of the most important highlights of that episode of the tom whitehead story. one, we showed that small countries like luxembourg could license slots to commercial companies, much as the government has licensed frequency spectrum. today, the successor company is
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the largest taxpayer and the second-largest employer in the grand duchy of luxembourg, the country with the highest per capita gnp in the european union. two, tom had the rare combination of technical and entrepreneurial skills to, with the idea that small dishes and a satellite could revolutionize and him make mass-market satellite television. his vision opened the doors to commercial television in europe and later around the world in most places were only state monopoly television existed. this change the ability of governments to control the airwaves. ironically, while we were called to coca cola satellite and the trojan horse for american television, all of our first
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channels were european startups. later, regional startups like al jazeera. four, we created the grand duchy of luxembourg's most successful business. by 2012, s.e.s. had become the world's second-largest private commercial satellite company, both in retrospect to its revenues and the number satellites it operated today numbering 62. at fiscal year end 2000 11, it reported revenues in excess of $2.2 billion, earnings in excess of $1.6 billion in the market capitalization exceeding $11 billion. s.e.s distributes more than 6200 tv radio, and radio services
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covering 95% of the planet earth. it was the ride of a lifetime. tom was to me the role model entrepreneur. and more. he was a father, he was a .riend he has inspired me all of my life. and dude, including to the work i do today, which is the promotion of entrepreneurship along the world. my tagline is ,"world peace through entrepreneurship. i think about tom and i miss him every day of my life. [applause] >> as the youngster, i will be
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blogging during my talk. i rocked some electronic devices. i am deeply honored to be asked to speak here on this occasion. that is not a cars -- a cause for alarm. i will be brief. the papers of clay whitehead are quite something. i look forward to diving into them to learn more about that pivot point in us history in which tom played such a central role, commenting and advanced deployment that was exciting and politically dangerous.
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this donation to the library of congress will be a treasure trove for scholars seeking to understand the emergence of competition in the communication sector, the forces that opposed it, the institutions that resisted, and the policy entrepreneurs who made it happen. this will we'll add to the knowledge of the social bounty it has yielded and the economic changes it continues to bring. 45 years ago, the world thomas always different. just about everyone of us on this panel had to talk about this. it was not just that the technologies of of today were not invented. many of them had been invented. they could not be deployed. that was due to the structure of a regulated information markets. there was one telephone carrier , one satellite service, three are cast tv networks. i was the wildly competitive
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industry in the sector. until his death in 1966, lenny bruce, a comedian, used levine -- used the line, communist is a drag. it is like one big telephone company. a totalitarian dick tater ship -- dictatorship, the soviet union, nobody seemed much bothered. when regulators began to consider the possibility around the options since 1946 authorizing cellular tally of -- telephone systems, they concluded that only one firm or market could ever provide this natural monopoly service. to be safe, the federal communications commissittee
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proposed each local license be given to at&t so only a vertically integrated cellular system could survive. when cable operators sought to compete with broadcast tv, before it was squashed by regulators who feared that the upstarts would siphon audiences, undermining the business models of tv broadcasters licensed in the public interest. such policies were not controversial. for many years, they survived scrutiny by the u.s. courts. the conventional wisdom was that communication markets were natural markets and wireless services depended on a delicate coordination process that could only be administrated by the state. competitive market forces were impossible.
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they were wrongheaded. we constructed this monopoly protected by a double moped -- moat with washington corona -- piranha. that is not as gentle as the amazonian perrone. the liberation of the human mind has never been further by dunderheads. it has been furthered by gay fellows who heaved dead cats into sanctuaries. they proved to all men that doubt was safe. tom whitehead was no dunderheads. he was a gay fellow blessed with more than his fair share of exuberance doubt from a perspective others missed, a better vision are merged. please allow me to usher my
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seventh grader that were harmed in the implantation test implementation of tom whitehead's vision. while his strategies were well thought out, he did not like -- like pondering the vision. he was a man of vision. we have heard the wonderful story. consumers in europe had been denied the motto come of program diversity developed for u.s. viewers. it was not until 1986 that the first private television patient in germany was authorized. tom white house -- tom whitehead seized the moment to create this wonderful corporation. he brought news information and entertainment to millions of eager video consumers in europe. and today, around the globe. tom whitehead achieved things
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more challenging. he organized an effort to bring communications policy to the highest reaches of the executive ranch policymaking. that enterprise launched many historic careers while laying the foundation for change in policy mines had. the default position between 1970 and 1975 switched. the question had been, who needs more than one? by the tom tom had gone down the highway, people were asking , why limit competition? and attacking this problem, tom made one of the most brilliant contributions to communications markets since morse, belt, or marconi. he managed to pull the legs out from under the satellite communications monopoly. it was not just any old monopoly. it was concept -- commstat.
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it turned out not to be a fair fight. tom one open skies. i 1975, competitors were legal and markets -- rockets were launching. new satellites, created new markets. markets that have not been anticipated. this triggered a tidal wave that crashed upon the entry various in the markets that lay beyond satellite. it brought cable tv competition into video. it also served as proof of concept demonstrating that not only was doubting the status quo safe, it could produce social gains. dramatic innovation.
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distinct thinking about how the communications world should be sharp shirt emerge -- should be structured emerged. one never seemed like such a large number after the skies were open to competition. tom whitehead's vision is still moving markets. thanks to the liberalization of wireless, rivalry controls the use of mobile airways. no regulator could have imagined or would have authorized the blackberry, iphone, ipad, kindle, onstar or economize -- machines that economize on gas. competitive forces now organize radio spectrum uses of intense complexity. competitive forces in mobile services have created stunning
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depth and breath in the marketplace. wireless is the poster child for creative destruction. the article was about google, microsoft, apple, and facebook. neither firm owns an fcc license or base station. now, entire commercial empires are floating on the spectrum markets made possible by those who when others cannot see how competition for work. i think tom whitehead for his contributions to our world. i do not blame him for the thousands of text messages a ninth grader made the producing over a one or two hour span.
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omg. [laughter]there is only so much vision that can be contained in one man. i will not link tom for this. i am delighted today with the amazing dedication of margaret whitehead and organizing and cattle learning that and cattle lording -- and logging this record. the historians and all students of communications may better understand our modern times and the world to come. this work is not available for inquiry through the library of congress. we alumina new insights. thank you kindly, mr. whitehead for this contribution to the
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american people and to scholars everywhere. [applause] >> thank you, gentlemen. i will see if members of the panel have anything to add, given what they have heard others say. i will start with a little point about the value of this tremendous collection of papers that margaret has put together. as i was preparing for today, i was going through some of the papers that are in the collection. i came across something that tom hayslip wrote a few years ago. it was based upon talking with people who worked with tom at
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the time at&t had an antitrust case in 1974. i am sure that tom had strong feelings about the merits of the case. he had worked with bruce owens and others. in 1974, the justice department was proposing to file suit against at&t. it was giving the white house a heads up and implicitly looking for some sort of a high sign or approval of it. this was a momentous step. this is different from filing a policy paper or encouraging deregulation at the fcc. for all of the jokes about the bell system, it was an important national institution, important interest in washington, including the pentagon were dead
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set against disrupting it. it was a vital part of the american infrastructure. this was going to be a brave step. this is what tom hayslip reports. not something that tom had said but somebody who was with him at the time has said. as word went around, word came back from the secretary of treasury. secretary schultz said, i want you to know that i would like to request that we defer filing this suit until the next treasury bond auction. at&t also has a bond auction coming up. they sell more bonds than the american government does. this will complicate what we are up to. that was just kind of the standard thing that goes on. tom looked at that and he
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thought, if the united states government and its financial operations has to tiptoe its way around the belt system, something is wrong. he gave the thumbs up. that is the kind of -- that is one of many nuggets and you can get him going the tom whitehead website. i want to ask henry, dale, bruce. we have had a lot to say. the people in the audience would like to get an order in. if anyone would like to comment on the other presentations, please do so. >> one thing occurred to me. it is a question for my fellow panelists and the our youths. everything is imperfect -- everything is not perfect and telecom. if tom were with us and
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functioning in the spirit that he always functioned and, what would he try to change? what development would bother him very much about what we have today? does anyone want to take a crack at that? >> i would be glad to. to and fruit -- to impute my views with tom. the biggest problem from an economic point of view and the telecommunications business is the spectrum remains largely noncompetitive. it is not allocated by markets. it is mostly controlled by the government. in the areas of mobile telephone service, it has been largely deregulated and turned over to private markets. it is subject to fcc regulations. there are huge areas of the
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spectrum where that is not true. chiefly, for example, the broadcast spectrum. the us think economy would be off and larger if the people who continue to control the spectrum went somewhere else. i am now studying corruption in government. >> what he said. i agree. in the years since 1974, we have solved the problem about individual corporations having larger bond issues in the united states. we have taken care of that one. we have worked on that from both angles. >> i have one thought.
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i sat for months and months working with tom on the cabinet committee report on cable television. we do not call that as one of his greatest succession -- successes, but it led to the integration of the pipe system for those integrating with the cable head we proposed a policy called the separations policy. henry is very familiar with the separations policy, which essentially was a common carrier policy. if you control the pipe, you could not take advantage of the gatekeeper control and
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disadvantage people that competed with you for programming. that was a concern. it was a recommendation in our cabinet committee report that went absolutely nowhere. today, it he saw the extent of vertical integration, both in the wireless world and the cable world and, he would have wantedo do something about that. >> i agree. he would be disappointed at this point that we have not had more robust competition in the local area than we do. that might reflect my own bias, of course. >> the issue of vertical integration is controversy over , but i think the most conservative position is that
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vertical integration is almost always a bad thing when one of the companies that is vertically integrated, one of the different stages of production is a monopoly, and not otherwise. at the time of the breakup of at&t, the assumption was that the local systems were natural monopolies and we were there for dealing with vertical integration by a monopoly in two potentially competitive upstream businesses and in both cases ott was consistent in proposing that the monopoly -- the assumption that it was a monopoly, not control, vertically integrate into the competitive upstream businesses. the fact changed, or our perception of the facts changed,
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and it is no longer a monopoly, but the cable television service that is providing service in competition with the telephone company, and there are mobile communication services competing in voice services and to some extent in broadband. at some point, that will increase. the assumption that vertical integration is now still a bad thing simply does not work. maybe it is, it is still an empirical question, that you cannot assume it is a problem. >> are we allowed to disagree? [laughter]>> i was waiting for you. >> if there was a rule against that, you would not have invited me. when it comes to vertical integration and the wireless
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marketplace, i was surprised to hear you say that tom would be disappointed. the biggest players in wireless today in terms of profitability, market power is apple. they do not own wireless network. they came in as an innovator and are drawing enormous economic resources from the carriers. there is a wonderful battle there if you love the disintegration of vertical integration and is bringing benefits to consumers of incredible proportion. i think that is working well. bruce has the economist's slant on this, as it will be a legal under the antitrust laws, but we're are not seeing those cases filed against companies like apple for a good reason. the competitive market is working very well on that count.
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>> you shift the argument depending on the protocol. i would not argue the upper layers -- that is very competitive. the issue is how many fiber loops we have outside of their areas of concentration, and to me that is still problematic. i am not saying there are not people out there trying to do it, but that concerns even your wireless card you go 90% of the way on the fiber, and the last 200 feet on wireless. it is not really a wireless network. it is primarily a fiber network and that part still concerns me. there might be some residual market power that we need to address. >> thank you very much. that was the final part of the
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that -- panel planning, to give the audience the feeling of what a staff meeting felt like. [laughter]>> this was way too polite. >> i now wanted to see if there were comments from the audience. we have it established group of people, including many , many thatof tom's have worked at high levels on the problems we have been discussing. we have a roving microphone. i will call on people. if you could wait until microphone arrives and you can introduce yourself and make your comment.
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>> i am a friend of tom and margaret, and i also consulted with, and some people issues. one thing that impressed me about tom that showed his true character and his dog this was the fact that he would not settle his suit in luxembourg and pursued through the supreme court of luxembourg and one. that is more indicative of his character than anything else he ever did. >> no disagreement. >> no, it. -- no comment. >> walter burns. >> i suspect i am the oldest member since i will be 93 soon. 94? [laughter]at any rate, i will
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say something about the telephone system when i was a young boy in chicago in the 1920's. we had a phone. we had to put nickels in it, and be kept a boxer nichols to make these calls -- boxcar of of nichols, and the telephone man would come around and we would give him a dollar bill. what a changing world. [laughter]>> thank you. >> thank you. i am david maxwell. we are very dear friends of tom and margaret. i spent a lot of time with him
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at the end of his life, and it has been glancingly referred to by a couple of the speakers, but he was really passionate about internet freedom and very much involved in a behind the scenes way with trying to promote internet freedom, particularly in china. so, i just want to make the comment that that was typical of him, that he had moved on to a new issue that engaged his tremendous mind and passion. >> my name is bob leblanc. i was a friend of tom's for a long time.
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in fact, i was the last person interviewed to become the director of ott, and obviously you can see how well i did. tom took the job himself, it is obvious he knew what to do and i did not. aside from that, he became fast friends and for the last almost 25 years we were directors together at prudential mutual funds and bringing the insight and intelligence he had was very much to the benefit of the shareholders of all those mutual funds. i cannot tell margaret and everybody how much i missed him and how much i love 10. -- loved in. -- him harry >> thank you very much. -- him. >> justice scalia. yes, i wanted to make two points
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about tom. the first one makes the -- me very happy. i'm a very disorganized person. tom was very disorganized. [laughter]he really needed someone to keep track of his schedule, his office and everything else. it gives me great hope and >> keep trying -- great hope. >> keep trying. >> second thing, he was a man that had great things in mind but could also pay attention to smaller things. the first job he gave me when i became his general counsel was to ask me to fix a traffic ticket. [laughter]i regret that i had to tell him that i could not do it. [laughter]
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>> i think that it is time to move on to our perception. for -- reception. first, we will have some final words from margaret read -- margaret whitehead. i want to say thank you to these five gentlemen. [applause] [indiscernible]
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>> thank you. just another microphone. [indiscernible] >> think of what you have met life, and to our country. it is a wonderful, rich feeling.
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i know that we will remember this night and everything in it for the rest of our lives and all of you, so thank you so much. i think you can get from listening to the panel that we have heard these relationships are very deep and meaningful. what mattered to tom was getting things done, and obviously to these people as well, and the bond around that was really exciting and very dynamic. some of it was interesting, and in some cases his work, and i think you can see there is also -- historic, and i think you can see there is a great deal of humanity on this panel, and these are real people that have gone to a great deal of trouble to prepare themselves and have so much to say and contribute. so much to say and contribute.